Guide to Using International Standards on Auditing in - IFAC

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234 <strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts Audi<strong>to</strong>r’s Responsibility Our responsibility is <strong>to</strong> express an opinion on these financial statements based on our audit. We conducted our audit in accordance with <strong>International</strong> <strong>Standards</strong> on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit <strong>to</strong> obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures <strong>to</strong> obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the audi<strong>to</strong>r’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due <strong>to</strong> fraud or error. In making those risk assessments, the audi<strong>to</strong>r considers internal control relevant <strong>to</strong> the entity’s preparation of the financial statements in order <strong>to</strong> design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate <strong>to</strong> provide a basis for our audit opinion. Opinion In our opinion, the financial statements of CDE Company for the period ended December 31, 20X1 are prepared, in all material respects, in accordance with XYZ Law of Jurisdiction X. [Audi<strong>to</strong>r’s signature] [Date of the audi<strong>to</strong>r’s report] [Audi<strong>to</strong>r’s address] 17.5 Other Reporting Requirements In some jurisdictions, the audi<strong>to</strong>r may be required <strong>to</strong> report on matters in addition <strong>to</strong> the audi<strong>to</strong>r’s responsibility under the ISAs, as discussed in the following exhibit. Exhibit 17.5-1 Additional Reporting Requirements Report Under Separate Heading Discussion The audi<strong>to</strong>r may be required <strong>to</strong> comment on matters such as: • The adequacy of the entity’s accounting records; • Specific matters if they come <strong>to</strong> the audi<strong>to</strong>r’s attention during the course of the audit; and • Results of performing additional specified procedures. To ensure users understand these additional responsibilities, the audi<strong>to</strong>r would report on them within a separate section in the audi<strong>to</strong>r’s report (e.g., under a new subheading such as “Report on Other Legal and Regula<strong>to</strong>ry Requirements”).
235 <strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts 17.6 Supplementary Information Presented with the Financial Statements Supplementary information is information presented with the audited financial statements, but not required by the applicable financial reporting framework. Supplementary information may be required by law, regulation, or standards, or may be presented voluntarily. Supplementary information (not required by the applicable financial reporting framework) needs <strong>to</strong> be clearly differentiated from the audited financial statements unless it is an integral part of the audited financial statements. If such supplementary information is not clearly differentiated, the audi<strong>to</strong>r shall ask management <strong>to</strong> change how the unaudited supplementary information is presented. If management refuses <strong>to</strong> do so, the audi<strong>to</strong>r shall explain in the audi<strong>to</strong>r’s report that such supplementary information has not been audited. Exhibit 17.6-1 Clearly Differentiate Supplementary Information Presenting Supplementary Information with the Financial Statements • Clearly label the information as “unaudited.” • Remove any cross-references from the financial statements <strong>to</strong> unaudited supplementary information. • Place the unaudited supplementary information outside of the financial statements. • Identify the page numbers in the audi<strong>to</strong>r’s report on which the audited financial statements are presented. The fact that supplementary information is not audited does not relieve the audi<strong>to</strong>r of the responsibility <strong>to</strong> ensure that the information is not misleading or inconsistent with the other information contained in audited financial statements. (Refer <strong>to</strong> Volume 1, Chapter 15.9 that addresses ISA 720—Other Information in Documents Containing Audited Financial Statements.) 17.7 Audits Conducted in Accordance with ISAs and National Auditing <strong>Standards</strong> Where the audi<strong>to</strong>r is required <strong>to</strong> report on compliance with national auditing standards and the ISAs, reference would be made <strong>to</strong> both sets of standards in the audi<strong>to</strong>r’s report. A reference <strong>to</strong> both <strong>International</strong> <strong>Standards</strong> on Auditing and the national auditing standards is appropriate when the following conditions are met. Exhibit 17.7-1 Refer <strong>to</strong> Compliance With Both ISAs and National <strong>Standards</strong> Conditions • The audi<strong>to</strong>r’s report complies with each of the ISAs relevant <strong>to</strong> the audit. • All further audit procedures, necessary <strong>to</strong> comply with national standards, have been performed. • The jurisdiction or country of origin of the auditing standards has been identified in the audi<strong>to</strong>r’s report. • All elements (see Exhibit 17.4-1) of the standard audi<strong>to</strong>r’s report (even if using the layout and wording specified by national laws or regulations) have been included.
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